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Visa follows MasterCard, cuts off business with Backpage.com

CHICAGO -- Under pressure from the sheriff of the second largest county in the USA, MasterCard announced on Tuesday that it will cease doing business with the online classified portal Backpage.com. The web

CHICAGO — Visa will not process transactions from online classified portal Backpage.com, the company announced Wednesday, after the sheriff from the second-largest county in the United States asked it to end its business relationship with the company for "moral, social and legal" reasons.

The move comes a day after MasterCard announced it had ceased doing business with Backpage after receiving a similar call to action from Cook County Sheriff Tom Dart.

The website has long been the target of politicians and law enforcement officials, who charge that the site has provided a cloak of anonymity for pimps and unnecessary ease for their customers who use the site to arrange meetings with prostitutes.

Despite the outrage, efforts to effectively shame the company or pass legislation to force the Texas-headquartered, Dutch-owned company to shut down its adult advertising have been unsuccessful.

Frustrated, Dart, whose county includes Chicago, instead pressured the credit card companies, which are essential to Backpage's livelihood.

Dart wrote to the top executives of MasterCard and Visa on Monday and called on the credit card companies to cease processing transactions of adult services ads from the company. The website also includes plenty of legitimate listings, from people looking to rent apartments, sell a car or advertise a job opening.

"Visa's rules prohibit our network from being used for illegal activity," company spokesman John Earnhardt said in a statement. "Visa has a long history of working with law enforcement to safeguard the integrity of the payment system and we will continue to do so."

MasterCard said it followed its protocol of prohibiting its cards from being used for "illegal or brand-damaging activities" in making its decision.

"When the activity is confirmed, we work with the merchant's bank to resolve the situation," MasterCard spokesman Seth Eisen said. "Based on a request from the Cook County Sheriff's Office, we contacted Backpage's acquiring bank about the issue. They have advised us that they are terminating acceptance at this time."

American Express stopped doing business with Backpage earlier this year, spokeswoman Sanette Chao said. She declined to detail why the credit card company ended the relationship.

Dart on Wednesday thanked the companies for quickly responding to his request.

"The actions today of both MasterCard and Visa are huge and they should be roundly commended for their actions," Dart said. "We realize the battle ahead is still going to proceed. We realize that Backpage probably is not going to go away. But what we can tell you is that for all the women, children and men, to some extent too, that have been exploited by these sites it's going to be increasingly difficult for those events to occur again."

The website, which is similar to Craigslist, has been under pressure from lawmakers and law enforcement for years to end adult-services advertisements. Craigslist ceased posting adult and erotic service ads in 2010. Users can still use bitcoin to pay for ads.

In April, Backpage published over 1.4 million adult-services ads in the U.S., with the company bringing roughly $9 million in revenue per month through that channel, according to the Cook County Sheriff's Department.

Backpage accounted for about 70% of prostitution advertising among five websites that carry such ads in the United States, earning more than $22 million annually from prostitution ads, according to a 2012 estimate by AIM Group, a media research and consulting company.

Cook County Sheriff's Police Dept. say they have made more than 800 arrests since 2009 connected to Backpage adult service ads. Fifty of the arrests were for sex trafficking, involuntary servitude or promoting prostitution.

Dart argued that by taking away the ease of a credit card to advertise often underage girls who have been forced into the situation, MasterCard and Visa could help reduce the number of victims.

"(I)nstitutions such as yours have the moral, social and legal right to step up on this pervasive problem and make a fundamental and everlasting difference," Dart wrote in the letter to MasterCard CEO Ajaypal Banga and the company's board of directors.

Earlier this year, a federal judge in Boston threw out a lawsuit against Backpage that alleged that the web site was designed to facilitate sex trafficking. Judge Richards Stearns ultimately agreed with the company's — and digital rights groups' — argument that under federal law Web service companies are immune from liability for crimes by users.

Liz McDougall, senior counsel for Backpage, declined to comment. Digital rights advocates, however, were critical of the tack Dart took in going after Backpage.

"I really don't think this is the way we should be making law in this country," Rainey Reitman, activism director at the Electronic Frontier Foundation, which filed an amicus brief on behalf of Backpage in the Massachusetts case. "We shouldn't have informal pressure from public officials forcing financial service companies into deciding which types of speech should and shouldn't be allowed. MasterCard and Visa are not supposed to be the arbiters of free speech on the Internet."

Dart says his office did not threaten Visa and MasterCard, but simply asked for their cooperation. He added that he believes his agency is on firm legal ground.

"In this case, I would find it very, very difficult to understand how in anyone's twisted way (of thinking), we are infringing on someone's First Amendment right here," Dart said.